--Layoffs represent less than one worker per store --Company realigning workers across service channels --Geek Squad a key differentiator from rivals Best Buy Co. (BBY) is laying off about 600 employees from its Geek Squad, roughly 3% of the work force at the electronics retailer's services division. The company, which has about 167,000 employees, said it is eliminating positions as it realigns its work force across all service channels, according to Matthew Furman, Best Buy's senior vice president of communications and public affairs. "We recently made some adjustments to position our talent where we're seeing growth and give our agents the opportunity to serve customers best," he said. The 600 affected workers, out of 20,000 total in Geek Squad, would get severance pay. Analysts said the number of layoffs was relatively small, less than a person per Best Buy store. They also noted the value that Geek Squad brings to the struggling retailer. Michael Pachter, analyst for Wedbush Securities Inc., said because Best Buy doesn't have an advantage on products or pricing, "the only real differentiator is that they have service, that service is installation and advice, and that's what Geek Squad does." The Geek Squad's service offerings are "the reason you spend 10% more buying a television from Best Buy, because you need someone to install it and get it down right," he said, adding he thought the move was part of the company's effort to cut costs. Caris & Co. analyst R. Scott Tilghman noted that electronics' evolution to more integrated and connected devices has created the need for a service element at Best Buy like that at Apple Inc.'s (AAPL) stores. He also noted that services tend to be a higher margin business. A key element to Best Buy's turnaround strategy is a smaller store prototype it is testing in two markets that is focused on connecting customers with employees who can answer questions or help program equipment, which at its heart has a Solution Central help desk staffed by the Geek Squad. Interim Chief Executive Mike Mikan said during May's earnings call that at its new, smaller-format store models, Best Buy will expect both Geek Squad agents and the prototypical sales floor workers known as Blue Shirts to speak with authority about technology, with a mandate to shift customer expectations from repair to one of relationship. Best Buy's performance has struggled to keep up with changes in consumer electronics, as the weight of its big-box format inhibits it from fending off competitive pressure of online retailers. Minneapolis-St. Paul news station KARE 11 earlier Friday reported Best Buy was laying off about 650 Geek Squad employees. Best Buy shares were down 0.4% at $21.65 in recent trading. The stock has risen 8.9% in the last month on speculation that former Chairman Dick Schulze could pursue a buy out of the company he founded, but shares remain 32% lower than a year ago. Write to Joan E. Solsman at joan.solsman@dowjones.com
